Understanding Uninsured Motorist Insurance
All automobile insurance policies contain different provisions that cover different situations. It is important to understand each one before purchasing insurance for your vehicle.
1. Bodily Injury Liability: This is the only coverage that is mandatory in every policy along with property damage liability. It provides coverage to someone you injured if it is determined that you or a relative that is living with you is primarily at fault for causing the injury. Many policies also provide coverage for someone driving your vehicle with permission (never a good idea to loan your car out). Please note that many of the smaller insurance companies also exclude persons not listed as drivers of your vehicle or permissive users, so it is very important to talk to your agent or broker about that. California requires everyone to have at least $15,000.00 per person, $30,000.00 per accident and a minimum of $5,000.00 for property damage.
2. Property Damage liability pays for the property damage you cause to someone else’s vehicle, building and even signs walls and public property, up to the limits of your coverage.
3. Medical Payments: this coverage is not mandatory and pays medical expenses up to the limits of your policy no matter who’s at fault. It would also be in affect if you are injured as a pedestrian by a vehicle. Even if you have health insurance coverage you’re entitled to medical payments (med-pay) unless you have a policy that only pays after what your health insurance doesn’t pay, which is called excess med-pay. If you don’t have health insurance coverage, then the company must pay up to the limits you purchase. (Editor’s note: With the rise in co-pays and deductible, it makes financial sense to buy as much med-pay as you afford, at least a minimum of $5,000.00.)
4. Uninsured/Underinsured Motorist Coverage: By far the least understood provision of an auto policy. Basically, if you are not at fault and are injured by an uninsured motorist (and in some areas up to 50% of drivers are uninsured), this provision will pay you as if the other person did have insurance, up to the limits of your policy. This protection applies even if you, or a relative living with you, is a pedestrian struck by a vehicle, or if you are a passenger in a car that is not insured, or hit by an uninsured motorist, even a hit and run driver.
You can recover for your bodily injuries and pain and suffering. You don’t have to purchase an amount equal to your liability coverage but it is strongly recommended that you do. You’re buying protection for you and your family, unlike bodily injury liability coverage. It is not as expensive as a BI policy and is required by law to be offered in an auto policy. You may decline it, but you must sign a special waiver eliminating this coverage.
Underinsured motorist (UIM) is by law sold with UM coverage.
Suppose you’re seriously injured by an at fault driver who only has the minimum coverage of $15,000.00. You have $100,000.00 UM/UIM. If your case is valued at $100,000.00 or more, your insurance company will pay you the $100,000.00 limits, but they get a credit for how much the other driver has in B.I. coverage. In our example then, your insurance company would pay you $85,000.00, getting a $15,000.00 credit.
In my practice I have seen all too often clients that have high BI liability limits (100/300) and only minimum UM/UIM limits of 15/30. It is my opinion that the agents or brokers that sell clients these policies are doing them a great disservice and one that can have life changing consequences in a serious injury accident.
Liability coverage and Umbrella coverage helps protect your assets against someone else’s claim.UM protects you and your family members.
UM may help protect your assets if let’s say you are badly injured by an uninsured motorist, can’t work or pay bills. High UM limits would help cover those costs.